New Delhi, May 29
In a major initiative to attract foreign capital and stabilise rupee, the government today permitted residents of the Gulf nations and all EU nations to invest directly in stock markets and allowed individual overseas investors to bring up to $1 billion in debt market.

The relaxation in overseas investment norms for individual investors, also known as the Qualified Institutional Investors (QFIs), is aimed at "making QFI scheme more attractive to potential investors and enhance flow of foreign capital into India," the Finance Ministry said.

The government will also clear apprehensions over taxation policies. The Central Board of Direct Taxes (CBDT) will shortly issue clarifications on issues concerning taxation on QFI investments. Although the Finance Ministry has put on hold General Anti-Avoidance Rules (GAAR), there has been apprehensions among the global investors over tax policies, especially after the Budget.

The government had earlier in January allowed QFIs from 34 FATF (Financial Action Task Force) member countries to invest in the equity market. Following interest shown by investors, the government has expanded the scope of QFIs include six-member Gulf Cooperation Council (GCC) nations and the 27-nation bloc European Union.

"The residents of FATF member countries and those from the countries of the GCC and European Commission would now be eligible to be considered as QFIs", said Thomas Mathew, joint secretary in the Finance Ministry.

The decision to relax the investment norms comes at a time when the government and the Reserve Bank are making efforts to arrest the slide in rupee which touched a record low of 56.38 to a dollar on May 24, mainly on account of withdrawal of funds to the tune of Rs 1,500 crore since April by FIIs. This also led to sharp fluctuations in stock market.

Further liberalising the norms, the Finance Ministry created a separate sub-limit of $1 billion for QFI investment in corporate bonds and mutual fund debt schemes.

As of now, foreign investors were allowed to invest $20 billion in the country's corporate bond market. With this the ceiling will increase to $21 billion.

"We are looking at 6-14 months to see the optimisation of QFI inflows," Mathew said. The Finance Ministry also decided to do away with the restriction on number of days a QFIs can keep fund in their bank accounts in India, a move to ease norms for such investments.

Earlier they had to given money to Depository Participants in a pooled account and within 5 days the QFIs had to take investment decision. The ministry will also conduct road shows in five Gulf nations, including Kuwait and the UAE, during June 10-15. — PTI

New Delhi, May 29
The government has agreed to restructure Rs 35,000-crore debt of the textiles sector which has been grappling with industry sickness.

Following a meeting with the Finance Minister, Pranab Mukherjee, Textiles Minister Anand Sharma announced that the government has agreed that there is a need to support the textiles industry in this time of crisis.

Sharma said the total outstanding debt of textiles sector is Rs 1.55 lakh crore of which debt of Rs 35,000 crore needs restructuring. Government directions to banks to consider this on priority would be issued in this regard.

The minister said there was agreement with the Ministry of Finance that the debt restructuring package would be considered on a case to case basis by individual banks. The Ministry of Finance would examine in consultation with RBI for a two-year moratorium on term loans, special provision in NPA norms to avoid asset reclassification and working capital eroded to be converted into working capital term loans repayable over a period of 3-5 years. An inter-ministerial committee of senior officials would be constituted to coordinate with industry and banks in expeditious restructuring.

Textiles industry had represented about high stress levels and industry sickness and sought a restructuring package. Industry associations sought a two-year moratorium on long-term loans, special dispensation to be provided by RBI in its NPA rules working capital term loans. Textiles Minister had undertaken stakeholder consultations with the industry, bankers and Ministry of Finance.

The Apparel Export Promotion Council (AEPC) said the debt package was much needed by the textile sector as the garment export sector has been undergoing a severe financial crisis for the past three years due to problems in developed markets.

Volatility in foreign currencies, increase in yarn prices, increasing interest rates, transportation cost, increase in wages, recession in European Union are all leading to problems for the sector.

The decline in demand from major markets of the US and EU due to recession have significantly affected the exporting units and in this situation, a maximum number of exporting units are under-utilising their capacity and certain units have even stopped their operations also.

As the crisis has been mounting day by day, several units have turned NPAs and are unable to repay the loan and interest.

Chandigarh, May 29
With total outstanding dues of over Rs 3,800 crore from industrialists, the Punjab State Industrial Development Corporation (PSIDC) will be floating a new one-time settlement (OTS) policy for recovery of its long-pending dues. The new OTS policy is expected to be announced after the municipal elections in the state.

Sources in the Punjab Industries department informed The Tribune that the new policy is almost ready and the delay in announcement has been because of the model code of conduct in place for the elections to the local bodies. “The department has already completed several rounds of talks with industrialists to give a final shape to the new OTS policy, which they claim, will be different and more industry-friendly than the previous OTS policy of 2009,” said Anil Joshi, Industries Minister.

As of date, PSIDC has an equity outstanding of Rs 1,514 crore and a loan outstanding of Rs 2,307.07 crore. There are 109 defaulters on the equity side and 146 on the loan side. The previous OTS policy, which was announced in 2009, has been availed by 23 equity defaulters, helping the cash-strapped PSIDC recover Rs 47 crore. As many as 43 defaulters have also settled their accounts by paying up Rs 79 crore as dues.

Joshi said the new policy would dwell on the reasons why the OTS policy of 2009 did not get wide acceptance from the industry. “The amount of interest charged will not be very high, rather on a par with the interest charged by banks.

We are also examining how the recovered dues will be adjusted against the principal amount and towards interest repayment so that those who avail the scheme do not stop their repayment in between. We will also examine how even those units that had been wilful defaulters can be covered under the new policy,” he said.

Officials in the Industries Department also said the terms of repayment would be along the same lines as in the previous OTS policies of the state government.

Those availing the policy will have to pay 15 per cent of the defaulting amount while applying to avail this scheme and the remaining 15 per cent within 30 days. The rest of the amount will be recovered in equated instalments.

New Delhi, May 29
The Ministry of Corporate Affairs (MCA) has referred to the Serious Fraud Investigation Office (SFIO) the case of Rs 870-crore deceit in Reebok India allegedly by its two former top executives.

"Prima facie, we have found something wrong in their (Reebok) books. The matter has now been referred to the SFIO for further investigation," Corporate Affairs Minister Veerappa Moily told reporters on the sidelines of an Assocham event here today.

The move followed a non-invasive scrutiny carried out by the Registrar of Companies (RoC), Delhi, which submitted the report to the ministry yesterday, he said.

Last week, the ministry had ordered an inquiry into the books of accounts of Reebok's Indian arm over complaints of an alleged Rs 870-crore fraud.

Reebok India had filed an FIR with the Gurgaon police last week alleging its former MD Subhinder Singh Prem and COO Vishnu Bhagat of Rs 870 crore fraud. — PTI

New Delhi, May 29
In the light of upheaval in the country’s telecom sector due to cancellation of 122 licences by the Supreme Court and number of foreign operators looking at their investments failing as a result, brokerage firm Morgan Stanley has put a question mark on the business models of some of the telecom operators.

It also downgraded Indian telecom sector to “in-line” from “attractive”, citing increased regulatory risks and relatively weaker 3G outlook. The report downgraded Indian telecom stocks and slashed their price targets as the heightened regulatory risks put a question mark on their business models.

In the report, Morgan Stanley said, Telecom Regulatory Authority of India (TRAI) has suggested too high a price for future spectrum.

Last month, TRAI had recommended a reserve price of Rs 3,622 crore for one MHz of spectrum.

This is the second such report in two weeks which has put a question mark on the country’s telecom sector and the viability of operating business here in the present and emerging scenario.

Last week, Goldman Sachs had said in another report, “Telcos may be asked to pay a higher amount for spectrum in the upcoming 2G auction, as well as when the spectrum comes up for renewal. Such a scenario would likely raise questions on the viability of business models for most of the operators”.

The most affected telecom operator in the report was Reliance Communications (RCom) as the brokerage firm reduced its rating to “underweight” from “equalweight” and slashed its price target to Rs 51 from Rs 109.

The brokerage also downgraded Idea Cellular to “equalweight” from “overweight” and cut its price target for the stock to Rs 87 from Rs 134.

Berlin, May 29
Marking the ascendence of another Indian in the global financial system, well-known investment banker Anshu Jain will take over the reins of German banking giant Deutsche Bank as co-CEO on June 1.

The 49-year-old banker, well-respected for maintaining high profits at Deutsche Bank's investment banking operations during the 2008 financial meltdown, would take over at a time when the banking sector globally is grappling with regulatory and economic challenges. An economics graduate from the Delhi University, India-born Jain also holds an MBA in Finance from the University of Massachusetts Amherst.

Currently based in London, Jain heads Corporate & Investment Bank business of Deutsche Bank, whose other co-CEO would be Juergen Fitschen.

Jain is likely to provide a glimpse of future strategy along with Fitschen, when incumbent Josef Ackermann formally hands over the leadership to them at the annual shareholders' meeting in Frankfurt on Thursday. Though less impacted by the financial crisis, Deutsche Bank is still in the process of addressing issues related to its role in the global economic meltdown in the wake of sub-prime lending in the US housing market. — PTI

Seoul, May 29
Samsung Electronics launched its top-of-the-range Galaxy S3 smartphone in Europe on Tuesday, aiming to outsell the previous model that helped the South Korean company topple Apple as the world's largest smartphone maker.

The Galaxy S3, which tracks the user's eye movements to keep the screen from dimming or turning off while in use, hits stores in 28 European and Middle-East countries, including Germany and Britain, as Samsung aims to widen the gap with Apple months ahead of its rival's new iPhone, expected in the third quarter.

The smartphone, running on Google's Android operating system, boasts a 4.8-inch (12.2 cm) screen, one of the largest on smartphones ever, and much bigger than the 3.5-inch display on the iPhone 4S.

Top global carriers - from Britain's Vodafone to Singapore's SingTel - have started to aggressively promote the S3, fuelling speculation the smartphone could top its predecessor, the Galaxy S2's 20 million sales worldwide.

"In the two years that we've been offering pre-orders, it's the most pre-ordered Android device we've had in our line-up," said a spokesman for Vodafone UK, declining to disclose exact numbers. "It's on track to meet, if not exceed, the level of pre-orders we expected by the time it actually launches." Samsung itself has said it expects the new flagship model to outsell its predecessor. — Reuters